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Corporate Cash Piles Up

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By 24/7 Wall St.

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The debate over how America’s largest companies use cash will pick up again. Moody’s Investor Services released a study that forecasts how big the cash balances will be at some of these public corporations at the end of 2013.

The kind of activism Apple Inc. (NASDAQ: AAPL) has faced about distributing its cash to shareholders through a higher dividend or share buybacks almost certainly will spread to the other companies on the Moody’s list.

The Moody’s report put Apple’s year-end cash balance at $170 billion. Microsoft Corp. (NASDAQ: MSFT), Google Inc. (NASDAQ: GOOG), Pfizer Inc. (NYSE: PFE) and Cisco Systems Inc. (NASDAQ: CSCO) are also on the Moody’s list. Perhaps the most critical difference between these companies and Apple is that they have shown a history of acquisitions. Apple has never used its money that way, at least on any large scale.

According to MarketWatch:

Overall, corporate-cash stockpiles at U.S. non-financial companies rated by Moody’s grew to $1.45 trillion in 2012, up 10% from 2011, according to the report.

Filed under: 24/7 Wall St. Wire, Dividends & Buybacks Tagged: AAPL, CSCO, GOOG, MSFT, PFE

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Business, Finance, Occupation & Industry

What's Important in the Financial World (3/19/3013)

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By 24/7 Wall St.

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Corporate Cash Piles Up

The debate over how America’s largest companies use cash will pick up again. Moody’s Investor Services released a study that forecasts how big the cash balances will be at some of these public corporations at the end of 2013. The kind of activism Apple Inc. (NASDAQ: AAPL) has faced about distributing its cash to shareholders through a higher dividend or share buybacks almost certainly will spread to the other companies on the Moody’s list. The Moody’s report put Apple’s year-end cash balance at $170 billion. Microsoft Corp. (NASDAQ: MSFT), Google Inc. (NASDAQ: GOOG), Pfizer Inc. (NYSE: PFE) and Cisco Systems Inc. (NASDAQ: CSCO) are also on the Moody’s list. Perhaps the most critical difference between these companies and Apple is that they have shown a history of acquisitions. Apple has never used its money that way, at least on any large scale. According to MarketWatch:

Overall, corporate-cash stockpiles at U.S. non-financial companies rated by Moody’s grew to $1.45 trillion in 2012, up 10% from 2011, according to the report.

Cypriot Parliament to Weigh In

The parliament in Cyprus may block the government‘s attempt to seize money from the savings accounts of its citizens as a way to raise money to get access to bailout funds. If so, the anxiety about the action, and its possible effects on the plans of other financially weak EU nations, should drop. Some analysts believe there could be a sort of contagion, if countries like Greece run out of options to close budget gaps. Cyprus does not have anywhere else to turn for the money, which is the primary reason it took such measures. According to Reuters:

Cyprus‘s parliament is unlikely to pass legislation taxing deposits which has prompted turmoil in its banking system, falling short on a condition for an international bailout, government spokesman Christos Stylianides said on Tuesday.

Apple and Its Shadow

Wherever Apple Inc. (NASDAQ: AAPL) goes, Samsung is never far behind it. The South Korean company said it will build and market a smartwatch, just as Apple is rumored to be doing. Among a heightened competition, the launches are likely to cause another round of intellectual property and patent challenges in courts around the world. These kinds of fights already are well along as Samsung has challenged both the iPhone and the iPad. According to Bloomberg:

“We’ve been preparing the watch product for so long,” Lee Young Hee, executive vice president of Samsung’s mobile business, said during an interview in Seoul. “We are working very hard to get ready for it. We are preparing products for the future, and the watch is definitely one of them.”

Filed under: 24/7 Wall St. Wire, Market Open Tagged: AAPL, CSCO, GOOG, MSFT, PFE

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VirnetX Stock Tumbles on Hung Jury

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By 24/7 Wall St.

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In a patent infringement case similar to the one it won against Apple Inc. (NASDAQ: AAPL), a jury has been unable to reach a verdict in lawsuit brought by patent licensing firm VirnetX Holding Corp. (NYSEMKT: VHC) against network titan Cisco Systems Inc. (NASDAQ: CSCO). The judge in the case, which is being tried in Tyler, Texas, has instructed the jury to return to its deliberations.

VirnetX won a $368 million judgment against Apple for infringing on patents VirnetX holds related to secure communications technology. Apple appealed and the appellate court upheld the ruling. The two companies were ordered by the judge to work out a licensing agreement for future royalties.

VirnetX’s case against Cisco includes claims of infringement on two of the patents under dispute in the case against Apple. The patent company is seeking $258 million from Cisco fr.om the same judge who ruled in favor of VirnetX’s appeal.

Shares of VirnetX are down 14.7% at $30.42 in a 52-week range of $21.25 to $41.93.

Filed under: 24/7 Wall St. Wire, Internet, Law Tagged: AAPL, CSCO, VHC

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Who Will Replace Tim Cook as Apple CEO?

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By 24/7 Wall St.

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There are not many companies that could have a 35% stock drop in six months where the CEO would be under tremendous pressure. That includes Apple Inc. (NASDAQ: AAPL) CEO Tim Cook. Although he was hand-picked by deceased former CEO and founder Steve Jobs, the Apple board many consider him a liability if Apple’s new products fail in the marketplace and the company misses a number of its financial forecast, and its share prices continues to fall rapidly. Apple’s board, like any other responsible one, has an obligation to pick the best person possible run the company. And Cook may have stumbled though enough tests that his ouster may be just months away.

Who would replace Cook? The list is fairly short, given Apple’s size and the complexity of its products and technology.

Apple would not turn inside the company to pick a new chief executive. Too many of Apple’s most senior management have been with the firm too long and are tainted with their association with Apple’s trouble.

Potential new CEOs for Apple:

John Chambers of Cisco Systems Inc. (NASDAQ: CSCO) is considered the dean of Silicon Valley CEOs. Chambers, who is almost 65, has captained Cisco since 1995. The firm’s revenue over that period has grown from less than $2 billion a year to nearly $50 billion. Cisco’s operations are vast, and among the most complex in the tech industry.

The dark horse for the Apple job is the chairman of arch rival Google Inc. (NASDAQ: GOOG) — Eric Schmidt. He is no longer CEO of Google, having been moved out of that job by the board and replaced by Larry Page. Google’s shares have reached an all-time high, and much of the reason for the firm’s success goes to Schmidt. But Schmidt may want a second act after being pushed upstairs at Google. If he joined Apple and turned it around, he could be considered the greatest CEO in tech history. That, by itself, could be an enticement. And Schmidt has another advantage. He is a former Apple board member.

Retired International Business Machines Corp. (NYSE: IBM) CEO Sam Palmisano led one of the world’s largest technology companies through a transformation that helped it diversity into software and services and move it further away from hardware. He ran IBM during the mammoth integration of PricewaterhouseCoopers Consulting in 2002, considered one of the signature moves in reinventing IBM.

The most risky move Apple could take is to hire former Hewlett-Packard Co. (NYSE: HPQ) CEO Mark Hurd, who was pushed out of the company and is now co-president of Oracle Corp. (NASDAQ: ORCL). Oracle founder Larry Ellison said that Hurd was one of the tech industry’s most skilled leaders and recruited him within weeks after his ouster from HP. Hurd is known as a hard-nosed operator who ran one of the most diverse tech companies in the world, and ran it well.

There is a slight chance Apple would turn to its own board. Chairman Arthur D. Levinson built biotech company Genentech. He was made CEO of that company in 1995 and is credited with making it into a …read more
Source: FULL ARTICLE at DailyFinance

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Deutsche Bank Says Buy the Enduring Eight Tech Stocks (CSCO, EMC, HPQ, IBM, INTC, MSFT, NTAP, ORCL)

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By 24/7 Wall St.

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During the bull market for technology stocks in the 1990s, investors eagerly awaited the quarterly results from the large-cap technology leaders. The personal computer was being totally integrated into the home and business environment and pricing was more competitive with each passing year. In a new research report, Deutsche Bank A.G. (NYSE: DB) says its time for investors to own the “Enduring Eight” big-cap technology leaders again.

With business fundamentals expected to improve in 2013, corporate spending is expected to follow suit. The analysts at Deutsche Bank expect an upturn in tech business spending in 2013, after a flattish 2012, as growth picks up and confidence improves. Companies have been frugal in their information and technology budgets, and their IT infrastructure has aged. Gartner forecasts around 5% annual growth in information technology (IT) spending from 2013 to 2016, led by storage and software.

One key reason cited for purchasing the large-cap tech leaders is that, in the Deutsche Bank view, large multinational companies treat the global tech giants as key operational partners and not mere vendors. The long-term and global relationships these tech leaders have with customers are part of their ability to endure the challenges of a dynamic and competitive industry – a key difference from consumer tech products. In addition, these companies are already key players in big data, cloud and mobility, the main drivers of business IT spending

These are the Deutsche Bank enduring eight tech stocks to buy:

Networking leader Cisco Systems Inc. (NASDAQ: CSCO) currently is trading near the $20 level. The Wall St. consensus estimate target for Cisco is $26.

Storage giant EMC Corp. (NYSE: EMC) makes the list. It is trading at what appears to be a support level of $23. The Thomson/First call price target is $30.

Hewlett-Packard Co. (NYSE: HPQ) is the only personal computer company to make the grade. It closed last Friday at $20.15, and the consensus target is lower at $17.50.

International Business Machines Corp. (NYSE: IBM), the leader in IT products and services worldwide, has a consensus price target of $230. The stock closed Friday at $202.91.

Semiconductor giant Intel Corp. (NASDAQ: INTC) is the only chip company to make the Deutsche Bank list. The stock closed Friday at $21.03 and has a consensus price target of $23.00.

Windows software maker Microsoft Corp. (NASDAQ: MSFT) also makes the Deutsche Bank list. The stock closed Friday at $27.95 and has a consensus target of $33.

Network storage solution leader NetApp Inc. (NASDAQ: NTAP) is trading near $33.95, which is way below the 52-week high of $46.80. The consensus price target is $40.

Application software giant Oracle Corp. (NASDAQ: ORCL) rounds out the enduring eight list. Trading close to its 52-week high at $34.63, it has a consensus price target of $38.

The analysts at Deutsche Bank point out that while growth disappointed in 2012, it should be better in 2013. Over the cycle, tech’s enduring eight have generated healthy growth, which has yet to be fully appreciated by investors. From 2006 to 2012, average …read more
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Business, Finance, Occupation & Industry

Short Interest Wanes in Some Big Stocks (GE, NOK, BAC, VZ, ANR, MCD, AAPL, RIMM, MSFT, DELL, GMCR, CSCO)

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By 24/7 Wall St.

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We have tracked the key short interest changes as of February 15 in the following large cap stocks: General Electric Co. (NYSE: GE), Nokia Corp. (NYSE: NOK), Bank of America Corp. (NYSE: BAC), Verizon Communications Inc. (NYSE: VZ), Alpha Natural Resources Inc. (NYSE: ANR), McDonald’s Corp. (NYSE: MCD), Apple Inc. (NASDAQ: AAPL), Research in Motion, Microsoft Corp. (NASDAQ: MSFT), Dell Inc. (NASDAQ: DELL), Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) and Cisco Systems Inc. (NASDAQ: CSCO).

General Electric Co. (NYSE: GE) short interest rose 6.4% to 77.96 million shares. About 0.7% of GE’s float is now short.

Nokia Corp. (NYSE: NOK) saw short interest fall by 2.7% to 330.97 million shares, about 8.8% of the company’s total float.

Bank of America Corp. (NYSE: BAC) short interest rise 10.3% to 166 million shares, which represents 1.5% of the company’s float.

Verizon Communications Inc. (NYSE: VZ) saw a 3.8% rise in short interest to 47.05 million shares, which represents about 1.6% of the firm’s float.

Alpha Natural Resources Inc. (NYSE: ANR) showed a rise of 3.6% in short interest, to 33.13 million shares, about 15.2% of Alpha’s float.

McDonald’s Corp. (NYSE: MCD) showed a rise of 12.5% in short interest, to 13.92 million shares, about 1.4% of the company’s float.

Apple Inc. (NASDAQ: AAPL) saw a short interest fall by 0.4% to 18.78 million shares, or 2% of the company’s float.

Research In Motion changed its name to BlackBerry (NASDAQ: BBRY) on January 30, and short interest for this period was reported under the old name and ticker symbol RIMM. It saw short interest rise by 5.4% to 136.51 million shares, or 27.6% of the total float.

Microsoft Corp. (NASDAQ: MSFT) posted a 4.4% rise in short interest, to 83.58 million shares, about 1.1% of Microsoft’s float.

Dell Inc. (NASDAQ: DELL) short interest fall by 30.1%, to 28.73 million shares or about 2% of the company’s float.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) saw short interest increase by 13.9% to 30.89 million shares or 25.4% of the company’s float.

Cisco Systems Inc. (NASDAQ: CSCO) saw short interest fall by 3% to 55.11 million shares or about 1% of the company’s float.

Short interest in Dell has declined dramatically again following the buyout offer from Michael Dell and his partners. The rise in BlackBerry’s share price has brought more short interest because few people really believe the new smartphones will make much of dent in the armor of Apple, Google Inc. (NASDAQ: GOOG) or Samsung. GE’s rise in short interest is likely due to investors’ belief that the stock is fully valued and prospects are dimming as the global economy continues its slow motion recovery.

Filed under: 24/7 Wall St. Wire, Large Cap Stocks, Short Interest Tagged: AAPL, ANR, BAC, CSCO, DELL, GE, GMCR, GOOG, MCD, MSFT, NOK, RIMM, VZ

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